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than profit. Not surprisingly, the dot-com model proved to be unsustainable, and only a small fraction survived the ensuing dot- com bust. If anything, the fact that investors agreed to finance money-losing business models illustrated a lack of understanding of the Internet’s inherent properties.
INTERACTIVITY
Unlike traditional mediums, the Internet is interactive. In other words, the marketer can both send and receive messages to many people simultaneously, creating a dynamic more akin to a conversation. Contrast that to a television commercial, which is a unidirectional burst of information more akin to a lecture. One is more likely convince another to act if they take the time to listen to the opinions and reservations of the actor. Twitter is now used by companies to gauge people’s ideas and opinions about their brands. For those who had a negative experience, firms are contacting them to investigate what went awry and attempt to remedy the problem.
THE LONG TAIL
The word Long Tail is a term used to describe the declining demand curve for a product. At the head of the curve reside mainstream products, while at the tail are niche products (see Figure 4.1). In 2004, Chris Anderson, author of the book The Long Tail stated that customers were increasingly shifting their consumption away from mainstream, mass-marketed products, or ‘hits’ as he described them, to smaller sized, but larger in number, niche markets. Since the Internet is a market where costs of production, distribution and storage costs are a fraction of what traditional retailers pay and since there are no physical shelf-space constraints on the Internet, he argued that there is a compelling economic opportunity for companies to become distributors of products that target very narrow – in other words, small-sized – markets. His argument certainly has merit: more than half of Amazon’s sales are generated from titles that were ranked lower than the top 130,000 selling books of all time. Furthermore, in 2008, Apple’s iTunes has registered over 10 billion downloads.